Should You Close Old Credit Cards in Canada or Keep Them Open?

You’ve got a credit card buried in your sock drawer — no annual fee, barely used, maybe from when you first turned 19. Now you’re wondering if you should finally cancel it and simplify your financial life. Before you call the number on the back, it’s worth understanding what that card is quietly doing for your credit score every single month just by existing. Closing it might feel like decluttering, but the math doesn’t always work in your favour. Whether it helps or hurts depends on a few factors that most people don’t think about until after they’ve already made the call.

Quick answer: In most cases, you’re better off keeping an old credit card open in Canada, especially if it has no annual fee. Closing it can raise your credit utilization ratio, shorten your average credit history length, and reduce your credit mix — all of which can drag your score down. The main reason to close a card is if it charges an annual fee you’re not getting value from.

How Does Closing a Credit Card Affect Your Credit Score in Canada?

Closing a credit card can lower your credit score in Canada through three separate mechanisms. The first is credit utilization — your total balances divided by your total available credit. If you carry any balance across your cards, removing a card’s limit from the equation pushes that ratio up, and a higher ratio hurts your score. Equifax and TransUnion both treat anything above around 30% as a warning sign.

The second impact is credit history length. Lenders like to see that you’ve managed credit responsibly over many years, and older accounts contribute to a longer average history. When you close your oldest card, you eventually lose that history from your file — though closed accounts in good standing typically stay visible for up to 10 years in Canada before falling off entirely.

The third factor is credit mix. Having both revolving credit (cards) and installment credit (loans) shows lenders you can handle different types of debt. Closing your only credit card removes that signal entirely.

When Does It Actually Make Sense to Close an Old Credit Card?

There are legitimate reasons to close a card, and the clearest one is an annual fee you’re not justifying. If you’re paying $120 or $150 a year for a travel card but you haven’t travelled in two years, the fee is a pure loss. In that case, it’s worth calling the issuer first to see if they’ll waive the fee or downgrade you to a no-fee version of the same card — that way you keep the credit history without the cost.

Another valid reason: you’re actively worried about fraud or identity theft and you know you’ll never use the card again. A card sitting in a drawer is a card that could get compromised in a data breach without you noticing for months.

A less valid reason: you’re closing it because you don’t trust yourself around the available credit. That impulse is understandable, but cutting up the physical card or locking it in your closet achieves the same behavioural outcome without the credit score hit. Most issuers also let you set a low spending limit or freeze the card through their app.

Quick tip: Before closing any card, call the issuer and ask if they can downgrade you to a no-fee product. You keep the credit history, you keep the available limit, and you pay nothing.

What Happens to Your Credit Utilization When You Close a Card?

Your credit utilization ratio is one of the most heavily weighted factors in your Canadian credit score — roughly 30% of the total. Here’s why closing a card hits it hard. Say you have two cards: one with a $5,000 limit and one with a $3,000 limit, and you carry a $1,000 balance on the first. Your utilization is $1,000 / $8,000 = 12.5%, which looks healthy. Close the second card, and your utilization jumps to $1,000 / $5,000 = 20%. That’s still acceptable, but depending on your total debt situation, closing a card with a higher limit could push you from comfortable territory into the range that starts dinging your score.

The impact is proportional to the limit on the card you’re closing. Closing a card with a $500 student limit barely moves the needle if you have other cards with higher limits. Closing a card with a $10,000 limit when you’re carrying balances elsewhere can meaningfully hurt you. Check your utilization before and after the hypothetical close to see the real impact.

What Should You Do With Old Cards You Never Use?

The best approach for most people is to keep the card open but put it on a small recurring charge — a $5 Spotify subscription or a monthly transit pass — and set it to autopay in full every month. That keeps the account active (some issuers will close dormant accounts on their own after a year or two of inactivity), demonstrates responsible use to the credit bureaus, and costs you nothing if you set autopay correctly.

If you genuinely want to simplify, downgrading is better than closing. Most major Canadian banks — TD, RBC, Scotiabank, BMO, CIBC — will move you to a basic no-fee version of your card on request. Your account number stays the same, your credit history stays intact, and you lose the annual fee without losing the credit limit.

If you’ve already decided to close a card, do it when your credit score is at its strongest and you’re not planning to apply for anything major — like a car loan or a mortgage — in the next six to twelve months. Gives your score time to stabilize before a lender is looking at it.

Frequently Asked Questions

Will closing a credit card hurt my credit score in Canada?

Closing a credit card can lower your credit score in Canada, particularly if the card has a high credit limit or is your oldest account. It raises your credit utilization ratio and can shorten your average credit history length. The impact varies from person to person, but the effect is usually more noticeable if you have fewer accounts overall.

How long does a closed account stay on my credit report in Canada?

A closed credit card in good standing typically stays on your Canadian credit report for up to 10 years after it’s closed. This means you don’t lose the history immediately — but eventually, once it drops off, the length-of-history benefit disappears too.

Does it matter which credit bureau sees the closure, Equifax or TransUnion?

Both Equifax and TransUnion operate independently in Canada and may have slightly different information on your file, but both will record the closed account. The credit score impact is similar across both bureaus because the scoring models weight utilization and history length comparably.

Is it better to cancel or keep a credit card with an annual fee I’m not using?

If a card charges an annual fee and you’re not getting value from its rewards or benefits, it’s worth calling the issuer to request a downgrade to a no-fee product first. If that’s not possible and the fee is significant, closing the card may be the right call — just understand the short-term credit score trade-off and plan accordingly.

What credit score impact can I expect if I close my only credit card?

Closing your only credit card is the highest-risk scenario. You’d simultaneously lose the card’s contribution to your credit history length, drop your total available credit to zero (eliminating your utilization advantage), and remove credit cards from your credit mix. If you’re in this situation, consider opening a basic no-fee card at the same bank before closing the old one so you maintain some form of revolving credit.

Want to understand everything that moves your credit score number in Canada? Start with Credit Score 101: what actually moves the number in Canada, then read Why Your Credit Score Dropped and What to Do About It if you’ve already seen a dip. And if you’re weighing whether a balance transfer card could help you manage existing card debt, Balance Transfer Credit Cards in Canada: Do They Actually Help With Debt walks through the trade-offs.

Ready to stop reading and start practising? Finnav is a free guided money app for Canadian students and new grads. Daily 5-minute missions. No jargon. No spreadsheets.